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For The Week Ending Nov. 16, 2012

COALITION SAYS FIX RENEWABLE FUELS STANDARD AFTER EPA DENIES WAIVER REQUESTS
A coalition of food and agricultural organizations today said it would work to fix federal biofuels policy after the U.S. Environmental Protection Agency denied requests that it waive the Renewable Fuels Standard (RFS), which requires corn ethanol to be blended into gasoline. A severe drought over the summer – the worst in more than 60 years – that hit much of the corn-growing regions adversely affected yields and pushed up feed grain prices. Dozens of pork, poultry, beef and dairy operations have filed for bankruptcy, been sold or gone out of business over the past few months because of higher production costs. The RFS will require 13.8 billion gallons of corn-based ethanol to be blended into gasoline in 2013, an amount that will use about 4.5 billion bushels of the nation’s corn crop, according to the U.S. Department of Agriculture. USDA’s Nov. 9 crop report puts this year’s corn harvest at just 10.7 billion bushels, down 13 percent from last year and down 28 percent from USDA’s May projection. The ethanol industry will use more than 40 percent of the corn supply next year. When Congress expanded the RFS in 2007, certain “safety valves” were added to the law. One provision allows the EPA administrator to reduce the required volume of renewable fuel in any year based on severe harm to the economy or environment of a state, a region or the United States. In addition to the livestock, poultry and dairy organizations, a bipartisan group of 34 U.S. senators and 156 House members and nine governors petitioned EPA to grant a waiver of the federal requirement for the production of corn ethanol because the mandate, coupled with a drought that has reduced yields and pushed up prices of feed grains, has caused the severe economic harm for which Congress added the “safety valves.”

GROUPS WANT RELIEF FROM ESTATE TAX
NPPC this week joined more than 30 agricultural organizations in urging Congress to provide farmers and ranchers with permanent relief from the estate tax. The tax is levied on the net value – less an exemption – of an owner’s assets transferred at death to an heir or heirs. A 2010 tax law set the exemption for 2011 at $5 million and for 2012 at $5.12 million; for both years the tax rate on an estate’s value above the exemption was set at 35 percent. But for 2013 the exemption is scheduled to revert to a pre-2001 level of $1 million per individual, with a 55 percent tax rate. There would be an extra 5 percent levy on estates valued at more than $10 million. In letters sent to the Senate and House, the agricultural organizations urged lawmakers to extend the exemption level and retain the 35 percent rate until permanent repeal can be achievable.

U.S.-EU TRADE DEAL MUST INCLUDE AGRICULTURE, ADDRESS TRADE BARRIERS
While maintaining its support for a free trade agreement between the United States and the European Union, a coalition of U.S. food and agricultural organizations led by NPPC reiterated that any deal must include agriculture and that the EU must address non-tariff trade barriers. In a letter signed by 60 organizations sent yesterday to the Office of the U.S. Trade Representative, the coalition said it is important that any FTA with the EU be comprehensive and address impediments to trade in agricultural products. The coalition, which sent a similar letter in January, urged U.S. Trade Ambassador Ron Kirk to negotiate a high-standard, 21st-century agreement. But that is not the type of agreements the EU has negotiated with other trading partners. The EU’s past FTAs have excluded agricultural goods it produces, and its regulatory measures often conflict with World Trade Organization rules, including regulations on “genetically modified” crop approval and labels, which restrict U.S. corn, soy and refined corn product exports, and on production methods in poultry, beef and pork. As part of agreeing to enter trade talks with the United States, for example, the EU Parliament said any FTA must include language on geographical indications, which would grant the EU exclusive rights to certain product names that, nonetheless, have been widely used outside of Europe for many years. (The United States would not be allowed to export to the EU, for example, “Parmesan” cheese, which is named after the Italian region where it first was produced.) The coalition said it is skeptical that the EU is prepared to undertake a U.S.-style comprehensive negotiation and to include agriculture. Click here to read the coalition letter.

EXPORTS OF U.S. PORK FELL IN SEPTEMBER BUT STILL UP FOR 2012
Exports of U.S. pork remain on pace to set a record despite slowing in September, according to data from the U.S. Department of Agriculture. For the first nine months of the year, the U.S. pork industry exported $4.6 billion of pork, an increase of 6 percent over the same period in 2011. (More than $6.2 billion of pork was exported last year.) Exports in September were down 6 percent compared with September 2011, but the U.S. pork industry exported from January through September about 27 percent of production – the same percentage as last year – and exports added $56.16 to the price of each hog over that time compared with $53.77 for the same period in 2011.

HOUSE PASSES RUSSIA PNTR
The House today approved by a 365-43 vote legislation authorizing permanent normal trade relations (PNTR) with Russia and ending the application of the Jackson-Vanik law. Russia joined the World Trade Organization (WTO) in August, compelling Congress to vote on extending PNTR status to the country and on repealing the Jackson-Vanik amendment, which affects U.S. trade with countries that restrict freedom of emigration and those with poor human rights records. The Russia PNTR bill requires the Obama administration to report on a number of trade issues, including sanitary and phytosanitary (SPS) barriers against U.S. agricultural products. The U.S. pork industry has concerns about a number of matters related to Russia’s WTO accession, primarily related to non-science-based trade barriers that have negatively affected U.S. pork exports to Russia. Only 41 percent of U.S. pork plants are eligible to export to Russia because of the imposition of unscientific SPS barriers. NPPC continues to work with U.S. trade officials to obtain an agreement with Russia providing for stricter disciplines on SPS issues. The Senate is expected to take up the Russia PNTR issue when it returns from next week’s Thanksgiving recess.

THAILAND PLANS TO ASK FOR ENTRY INTO TRANS-PACIFIC PARTNERSHIP
The Thai Cabinet this week approved a negotiating mandate for the Trans-Pacific Partnership (TPP) Agreement. The Thai government plans to announce its intent to join the TPP negotiations during President Obama’s visit to Thailand Nov. 18-19. Before officially engaging in TPP negotiations, Thailand must be invited by all 11 TPP member countries, and the Thai Ministry of Commerce must obtain parliamentary approval. The TPP negotiations represent the best opportunity for the U.S. pork industry to remove sanitary-phytosanitary (SPS) barriers to trade and to eliminate import duties in the countries involved in the negotiations. Thailand restricts U.S. pork exports through a non-science-based ban on the importation of pork produced using ractopamine, the reluctance of the Thai Department of Livestock and Development to grant import licenses for uncooked U.S. pork and an inspection fee of five Baht per kilogram ($162 per metric ton) on imported pork compared with an inspection fee of only $15 on domestic pork. The inspection fee is in direct violation of World Trade Organization rules, which require inspection fees to reflect the true cost of inspection.

ISO-OIE WORKING GROUP ON ANIMAL WELFARE
The International Organization for Standardization (ISO), a private for-profit organization that seeks to develop voluntary international standards, launched in August in conjunction with the World Animal Health Organization (OIE) a consultation on the formation of a new working group on animal welfare. Although NPPC worked closely with other animal agriculture groups to craft the U.S. position on the working group in opposition to its creation, the establishment of the ISO working group was approved. The inaugural meeting was held on Oct. 23, with the goal of delegates discussing comments raised in consultation and defining the scope of the group’s work. There was little consensus from stakeholders in attendance that the various industry standards and certification schemes in existence are a problem in need of addressing by the ISO or what void the ISO would fill in the development of animal welfare standards. Because of the lack of clarity in the full scope and role of ISO standards, the U.S. delegation volunteered to take a leadership role in the initial drafting of the working group’s scope and standards structure before sending the draft to the full working group for comment. The U.S. delegation that attended the October meeting believes this is the most important opportunity to influence the ultimate direction and impact of animal welfare standards.

NPPC URGES NEW ZEALAND AND AUSTRALIA TO REMOVE UNSCIENTIFIC TRADE BARRIERS
NPPC Vice President and Counsel for International Affairs Nick Giordano recently traveled to Australia and New Zealand to meet with U.S. and foreign government officials and industry representatives to discuss restrictions on U.S. pork because of unscientific concerns for the transmission of porcine respiratory and reproductive syndrome (PRRS). The court system in New Zealand currently is reviewing a government import health standard that allows for the importation of consumer-ready pork from the United States. Giordano, who was joined by Kansas State University PRRS expert Dr. Bob Rowland, argued that PRRS is not a food-safety issue and does not pose a risk to human health. The World Organization for Animal Health (OIE) does not include the trading of pork as a risk of spreading PRRS. The OIE emphasizes that the main risk of spreading PRRS is through trade in live animals and semen and does not list measures to control pork trade in its recommendations on prevention and control of the disease. The legal importation of fresh, chilled and frozen pork from PRRS-endemic countries never has resulted in any outbreak of PRRS in countries that are known to be PRRS-free. New Zealand and Australia, said NPPC, should remove all PRRS-related restrictions for full and open access for U.S. pork and pork products as a part of the Trans-Pacific Partnership negotiations.

MEXICAN TOMATO SUSPENSION AGREEMENT
The U.S. Department of Commerce in 1996 initiated an anti-dumping investigation on fresh tomatoes from Mexico. Later that year, the department negotiated a suspension agreement with Mexican producers of fresh tomatoes that has since set a reference price for tomato imports from Mexico. The agreement subsequently has been renewed a number of times. In June 2012, U.S. tomato producers requested a withdrawal of the underlying anti-dumping petition to terminate the suspension agreement and possibly to file a new anti-dumping case. Following a short comment period, the Department of Commerce announced its preliminary decision to terminate the suspension agreement. It now has 270 days to issue a final decision. Termination of the agreement could lead to retaliation from Mexico against U.S. pork exports, putting the 9,000 U.S. jobs supported by current U.S. pork exports to Mexico at risk. During recent comment periods, NPPC and many other groups have urged the Commerce Department to proceed with the utmost caution.

PORK ORGANIZATIONS RELEASE INDUSTRY PROGRESS REPORT
NPPC and the National Pork Board have issued a report on the U.S. pork industry’s progress in making improvements in animal care, food safety and in a number of other areas. Titled Responsible Farming, the report details pork producers’ history of responsible practices and the industry’s self-imposed efforts to improve animal well-being, food safety, environmental stewardship and community involvement. To read the report, click here.

NEW PIG GENOME STUDY FINDINGS COULD ADVANCE PIG, HUMAN BIOMEDICAL RESEARCH
According to a press release issued yesterday from the U.S. Department of Agriculture’s National Institute of Food and Agriculture, a new analysis of the pig genome reveals similarities between pigs and humans that could advance biomedical research. Findings from the study, reported in the journal Nature, also may lead to better breeding strategies, improved pork production and improvements to human health. The research was conducted by scientists as part of the International Swine Genome Sequence Consortium.

FOOD DIALOGUES PROVIDE BALANCED, INFORMATIVE DISCUSSIONS
The U.S. Farmers & Ranchers Alliance (USFRA), consisting of farmer- and rancher-led organizations and agricultural partners, Thursday held its third Food Dialogues discussion in New York City. Three panels of farmers, scientists, doctors and other food industry stakeholders discussed and answered questions about food marketing, healthy choices, media portrayal, antibiotics and biotechnology. Iowa pork producer Barb Determan served as a panelist on an antibiotics discussion, speaking about how producers use antibiotics and debunking several myths spread by anti-animal agriculture groups. USFRA also introduced the nine finalists for the Faces of Farming competition, including pork producer Chris Chinn from Clarence, Mo. The competition is a national search to put real faces on agriculture. Vote for your favorite “face” at www.fooddialogues.com. Voting ends Dec. 15. Winners will be announced in January 2013. Click here to view photos, and click here to watch the Food Dialogues and meet the finalists.

HAPPY THANKSGIVING
Congress will be in recess next week in observance of Thanksgiving. Capital Update will not be issued next week; it will come out again Nov. 30.

For questions, comments and suggestions or to unsubscribe, contact: Dave Warner, Director of Communications, NPPC, at 202-347-3600. To read previous issues of Capital Update, visit NPPC’s Web site at www.nppc.org.